By and  on February 7, 2006

WASHINGTON — The $2.7 trillion federal budget proposal that President Bush sent to Congress on Monday, with a focus on national security and tax cuts, calls for belt-tightening as well as loosening on a handful of trade and labor programs.

The 2007 budget request — subject to Congressional hearings, changes and approval — calls for the elimination of a total of 141 programs for a savings of $14.5 billion. The Departments of Defense and Homeland Security received the largest increases in funding. The blueprint also calls for making permanent the tax cuts that Congress authorized during Bush's first term, particularly on individual tax rates.

Bush asserted that his budget would halve the soaring federal deficit — expected to hit $423 billion this year — by 2009.

Among the budget items affecting the industry are:

  • A $1 million increase to $48 million for the Manu­facturing & Services program at the Commerce De­partment that evaluates what U.S. companies need to remain competitive on the domestic and international fronts.

  • Decreasing funding by $3 million to $40 million for Commerce's Market Access & Compliance program, which monitors how well foreign countries adhere to trade agreements.

  • Continued funding of $59 million for Commerce's Import Administration, which investigates countervailing duty and antidumping cases.

  • A $1 million cut to $42 million for the U.S. Trade Representative's office, which is negotiating trade agreements with South Korea, Colombia, Panama, Ecuador and through the World Trade Organization.

  • The Labor Department's Wage & Hour Standards enforcement program is slated for an $11 million budget increase to $208 million.

  • The administration also proposed a five-year renewal for the Generalized System of Preferences that expires at the end of this year. The GSP offers duty-free access to the U.S. market for goods from 144 countries and territories.
The plan is a "status quo budget" that "holds the line on discretionary spending but ... does not do enough to reign in skyrocketing entitlements," said Brian Riedl, senior budget analyst at the Heritage Foundation, a conservative think tank.

"Calling for significant domestic program cuts in an election year in which the President's popularity seems to be on the low side is going to be a real steep hill to climb for the administration," said Paul Kelly, senior vice president for government affairs at the mass merchants' Retail Industry Leaders Association.Stephen Lamar, senior vice president of the American Apparel & Footwear Association, said the budget appeared to back up the vision Bush spoke about last week in the State of the Union address for a more competitive stance in global business and more open markets.

However, Sen. Max Baucus (D., Mont.), the ranking Democrat on the Senate Finance Committee, said the budget "does nothing to boost U.S. competitiveness....What we needed and what the President promised was a budget that boldly reordered our nation's priorities toward global competitiveness," Baucus said in a statement. "But education and research don't get the boost that's necessary, even as this budget deepens deficits that drag our competitiveness down. It also sends the wrong message on trade, cutting funds for the very agencies charged with negotiating and enforcing trade agreements."

The fashion industry also keeps a close eye on Customs & Border Protection initiatives and funding.

Michael Chertoff, secretary of Homeland Security, of which Customs is a division, said at a news conference: "Transportation security and cargo security are other areas that we are very focused on in the budget. The budget also looks to add $30.3 million for enhanced cargo radiology screening at ports of entry, $139 million for the Cargo Security Initiative, $55 million for a joint partnership with the private sector in cargo security and $157 million for radiation portal monitor acquisition."

Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel, said, "We are very supportive of expanded funding for customs security measures in the budget. It is very important for U.S. importers who want to be working with companies that meet the C-TPAT standards and ship through CSI-improved ports since that helps improve security for their production."

Under C-TPAT, a joint government-industry initiative, foreign cargo deemed secured by prescreening techniques is less likely to be inspected once it arrives in the U.S. Major importers, including J.C. Penney, Gap, Limited and Liz Claiborne, have invested in the program.

The budget did not include additional funding for textile transshipment enforcement, which has been a point of friction between the administration and several textile-state lawmakers who charge that Customs has failed to properly allocate Congressionally approved funding to hire additional personnel in the textile area.

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